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Mulberry blames stagnant UK market for profit slump

Luxury label Mulberry has blamed the “difficult” economic climate in the UK and Europe coupled with international expansion costs for a £10m decline in profits.

In the year to March 31 total revenue fell from £168.5m in 2012 to £165.1m, while wholesale revenue was down 16% to £57.9m. Pre-tax profit dropped to £26m from £36m the year before, which Mulberry attributed to investment in directly operated international stores plus a contraction in gross margin

Bruno Guillon, chief executive of the luxury label, said: “Mulberry has a well-established business in the UK and a growing presence in Europe. With over 80% of our sales derived from these markets where the economic climate remains difficult, Mulberry’s challenge for the future is to accelerate our brand awareness in the USA and Asia.”

He added the label has had a “year of consolidation” in which Mulberry is “transitioning” from a “UK sucess story into a global luxury brand.”

However the brand reported an 8% increase in retail revenue for the period bringing the total to £107.2m. Mulberry also said that retail revenue for the 10 weeks to 8 June 2013 was up 9% with like-for-like sales up 6%.

The report follows a profit warning released by the brand in March stating the group expected a slump in revenues and profit before tax for the year to March 31.

Earlier this week the brand confirmed the departure of its creative director Emma Hill after more than five years at the helm.

 

 

Readers' comments (3)

  • i detect trouble in the camp! profits down and the creative director leaving!

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  • A couple of years ago I bought a Mulberry bag that cost around £400.

    The buckle came off. Twice. The 2nd time they offered to replace the bag but the ones they had in stock had badly matching leather. I accepted the best of the bunch.

    Shortly after I read an article where a spokesperson for Mulberry said the customer who 'only' paid £400 for a bag understood the bag was being made in China.

    Well I 'only' paid £400 for my bag but I did not understand it was being made in China. I just knew the quality wasn't good enough.

    The customer is not stupid. I've got a lot of Mulberry bags but I'll never buy one again.

    The Chinese customer isn't stupid either. They will realise they're paying a lot of money for bags they are making themselves!

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  • Customers aren't stupid. They notice when you downspec anything, especially a luxury item. They notice the thinner leather. They notice the poor quality.

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